If the determining function for Sales is given by Sales_i = α₀ + α₁Price_i + U_i, what will the correlation between Sales and Price be? A) α₀ + α₁ B) α₁ C) Cor(Price_i, U_i) D) There is not enough information.

Question

Quizplus · Accepted Answer

The correlation between Sales and Price depends on the relationship between Price and the error term U, which is not provided.

If the Determining Function for Sales Is Given by Salesi

If the Determining Function for Sales Is Given by Sales_i